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News : Irish Last Updated: Feb 18, 2013 - 8:37 AM

Monday Newspaper Review - Irish Business News and International Stories - - February 18, 2013
By Finfacts Team
Feb 18, 2013 - 8:33 AM

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The Irish Independent reports that the taxman will use GPS-style technology to help work out your property tax bill.

Sophisticated aerial mapping will be used to measure a home's proximity to shops, transport links, schools and other amenities that have a bearing on a property's value.

A 'deprivation index' will also be used to measure the affluence or poverty of an area, which will also have a bearing on the value and the amount of tax that should be paid.

Homeowners will receive letters in the coming weeks telling them how much the Revenue thinks their home is worth and the tax band the property falls into.

The revelations show the hi-tech lengths the Revenue is going to in order to clamp down on those who knowingly undervalue their home for the new charge.

It is employing a sophisticated database which calculates a property's location in relation to facilities that increase its value.

Aerial maps and GPS-style systems will measure "the distance from each property to a series of amenities and services".

These will include train and Luas lines, airports, health services, schools, shops and emergency services such as garda stations.

The data will then be used by the Revenue to arrive at its estimate of how much every home in the country is worth and how much property tax should be paid.

It could lead to more protests from people living in cities, where there are more amenities close to hand, who claim they will unfairly pay more tax than those in rural areas.

Dublin city dwellers are likely to pay an average property tax of €405 compared with their rural counterparts, who will pay about €249.

Once Revenue has compiled its estimates they will be posted to every homeowner in the country within a matter of weeks. The tax will be levied at a rate of 0.18pc of house value, with a higher "mansion tax" rate of 0.25pc on values over €1m. There will be up to 19 different valuation bands, starting at under €100,000 and increasing in €50,000 tranches.

But the tax is still effectively self-assessed as homeowners will decide themselves which band to put their house into.

The self-assessed value will override the Revenue estimate, but as previously revealed in the Irish Independent, those who deviate from the provided estimates face the prospects of checks, inspections and challenges.

If the Revenue's estimate is used by a homeowner, they will not be challenged.

Those who do not respond for the property tax will be liable anyway, and will pay the charge based on the Revenue estimate of their home's value.

To help the Revenue arrive at its estimates, a GPS-like system called GeoDirectory is now being used to measure the distance from homes to local services.

It is unclear if this is costing the Revenue significant extra money – the system already exists as a joint venture between An Post and Ordnance Survey Ireland.

GeoDirectory manages Ireland's only complete database of commercial and residential buildings.

Each of the buildings in the database has a unique identification, and the system can specify the use of around 90pc of buildings in the country – if they are, for example, a newsagents, school, takeaway or office block.

The technology is already used by city and county councils to help co-ordinate services such as local roads, libraries, sanitation and the fire services.

It is also used by various state agencies to analyse the population, assess which services are needed in which areas and to maintain records of every commercial and residential address in the State.

A Revenue spokeswoman confirmed that the proximity of amenities would be taken into account when estimating the amount of tax it thinks everyone should pay.

"A range of data sources is being analysed to assist in providing this valuation guidance," the spokeswoman said.

Other data feeding into the Revenue include stamp duty receipts from 2010 on, electricity bills, rental details and records from the controversial €100 household charge.

The spokeswoman said the GeoDirectory "provides information on property location and type; and spatially derived data that indicate relative distances of all residential properties from a series of key amenities and services including transport, health, education and emergency services".


The location data will also feed into a special online guide which will be set up on the Revenue website early next month to allow people to value their properties.

Among other things, the guide will take into account whether the property is semi-detached or detached or if it is an apartment, when it was built and the average prices of properties in the same area.

A deprivation index will be used to measure the "relative affluence or disadvantage of a particular geographical area using data compiled from various censuses".

The deprivation index was compiled for Pobal, a government agency that works for social inclusion, and is mainly based on the 2011 Census.

The Irish Independent also reports that a new plan to offer businesses a €1 cash refund for every €4 spent hiring someone off the dole will be weighted in favour of the long-term unemployed.

The level of subsidy will depend on how long the worker has been on the dole – with extra incentives for hiring people who have been unemployed for more than two years.

Depending upon the wages of the new staff member, the plan is expected to be worth around €5,000 a year to the employer.

And although the refund will be paid for two years, most of the money will be paid over in the first year, to make it more attractive to employers.

The new 'Jobs Plus' plan is aimed at getting employers to hire the long-term unemployed and will be included in the Coalition's Action Plan for Jobs for 2013.

It will be one of the headline proposals in the plan, known as 'disruptive reforms', which are aimed at changing the way the Government does business.

The scheme will be more lucrative for employers and easier to operate than existing assistance.

The refund continues for two years, as long as the worker is still on the books.

The employer has to commit to take the worker on for a full year at least.

But, cutting through the red tape, the employer doesn't have to prove they are hiring an additional member of staff.

However, there will be safeguards in place to ensure the scheme is not abused.

It is understood the plan will be announced by the Government this week after being cleared by Cabinet.

The refund will equate to 25pc of the gross cost of hiring someone in a job worth about €18,000 to €20,000 a year.

The gross cost would include the basic wage packet, PRSI and USC, where it applies.


Under a tiered system, the refund will be more generous where the worker was unemployed for more than two years.

The plan will replace the existing schemes available for hiring extra workers, such as the Revenue Job Assist and the Employer Job (PRSI) Incentive Scheme.

The Government is aiming to get away from tax relief-based schemes to help with the firm's immediate cashflow.

Jobs Minister Richard Bruton came up with the new proposals after employers complained that existing schemes were too complicated.

The Department of Social Protection came up with a way of administering the scheme simply.

The Action Plan for Jobs 2013 will be approved by Cabinet tomorrow after being put together by a range of department and agencies over recent weeks, including the Department of Jobs, Enterprise and Innovation, the Department of the Taoiseach and Forfas.

The Irish Times reports that the Government is facing resistance from the troika against any move to use gains from the Anglo Irish Bank promissory note deal to soften next year’s budget.

The troika has taken a disapproving view of claims on the Labour wing of the Coalition that the Government should ease the deficit-cutting plan.

Many at the top of Fine Gael favour waiting longer, prompting expectations in Government circles that the clamour to allocate gains from the deal will dominate the budget debate in coming months.

However, concern is building within the troika that early moves to relieve pressure on the budget could damage the push to regain access to private debt markets.

There is further concern that talk of extracting early fiscal gains from the deal might hinder the effort to prise longer bailout loan maturities from other euro zone countries. In addition, there is anxiety in the troika – comprising the International Monetary Fund, European Central Bank and the European Commission – that such talk could weaken the Government’s hand in the Croke Park public sector pay talks.


The Government is obliged to cut the deficit by €3.1 billion in 2014 and €2 billion in 2015, a total of €5.1 billion. Following the arrangement with the ECB to replace the promissory notes with long-term bonds, the Government believes it has scope to reduce the €5.1 billion by €1 billion in the two years.

Minister for Social Protection Joan Burton made a play in a Dáil debate last week to start using the proceeds from the deal this year, saying there was “a limit beyond which additional austerity becomes counterproductive”. Such remarks were very poorly received in troika circles.

“This doesn’t go down at all well,” said a European source in Brussels familiar with the rescue programme. “It doesn’t send the right signal to the other member states.”

Although Minister for Transport Leo Varadkar took an opposing view to Ms Burton in the Dáil debate, Tánaiste Eamon Gilmore said on Friday the deal will bring “a tangible benefit for people” in the next budget.

However, the European source said Dublin remains within a formal “excessive deficit procedure” with the EU authorities, under which the Government is obliged to use windfall gains to pay down debt.


“The council decision is still binding on Ireland,” the European source said in reference to the deficit-cutting plan agreed with the council of EU finance ministers.

Citing an expression made famous by former finance minister Charlie McCreevy, the source said suggestions that the gains would be used immediately to ease the fiscal adjustment were redolent of the “if I have it, I’ll spend it” mentality.

Such claims could be read as a sign Ireland was not willing to help itself. This was particularly so when the troika was urging other euro zone countries and non-euro EU members to help Ireland further by lengthening the duration of rescue loans from the European Financial Stability Facility and the European Stability Mechanism.

The source said additional measures might be required to ensure a smooth exit from the bailout programme after the summer.

The source also said the troika and market investors saw that Ireland’s primary budget deficit was still very high, and added the pace of fiscal consolidation set out in the current plan was “if anything too gradual”. There was an argument that Ireland “should have done more, earlier” to tackle the deficit.

The Irish Times also reports that the Central Bank has raised a number of significant issues that could prevent the successful authorisation of the VHI as an insurer. In particular, it has questioned the effectiveness of the risk equalisation scheme under which the VHI is compensated for its older and more expensive customer base.

The European Commission has given the Government until the end of this year to have the VHI authorised or face sanctions including fines and a State aid inquiry. Authorisation would put the VHI on an equal footing with other insurers Aviva, Laya and Glo in terms of capital and solvency requirements. The Government may have to inject up to €200 million into the VHI to bring it into line.

At an initial meeting with the Central Bank last month, Department of Health officials and representatives of the VHI gave conflicting assessments of the effectiveness of the risk equalisation scheme. Under the scheme, other insurers levy their customers and pay the funds into a central pool from which the VHI receives a compensating payment. The VHI claimed the scheme was 55 per cent effective and that a revised scheme due to come into effect at the end of next month was marginally worse. The department claimed the scheme was 70 to 75 per cent effective and would be improved with the goal of being up to 90 per cent effective.

Level of effectiveness 

According to minutes of the meeting seen by The Irish Times, the Central Bank was “puzzled” at the difference in views about the effectiveness of the scheme. Department officials and VHI representatives replied that “this was being actively reviewed” and they hoped to have greater clarity within the next month.

“It was absolutely clear the Central Bank is hugely concerned by the level of effectiveness of the scheme and, most particularly, as it affects the VHI’s financial position,” according to the minutes.

Deputy governor of the bank Matthew Elderfield “could not understand” how an application from the VHI could be considered without clarity around Government policy for risk equalisation.

The Irish Examiner reports that use of advanced traceability systems in the agri-food processing chain has helped underpin Ireland’s global reputation for food excellence, says one expert in this technology field.

Gerard Foskin, chief executive of business solutions firm Simply Dynamics, says Irish food companies are leaders both within the EU and globally when it comes to traceability.

Among other services, Simply Dynamics has a shelf-integration software package to manage and report on factory floor production, which it delivers with food technology company Emydex.

Among Simply Dynamics’ clients is Horgan’s Delicatessen Supplies in Mitchelstown, Co Cork, a food retailer and distributor to multiples such as Tesco, Dunnes Stores, Super-quinn, Marks & Spencer, SuperValu, and Aldi.

Horgan’s enterprise resource planning (ERP) system allows it to share real-time product, pricing, inventory, and invoicing information with multiples. The contract is valued at €200,000 over three years.

“Irish agri-food companies’ traceability standards are way ahead of their competitors,” said Mr Foskin. “The sector has been very conscious about quality. That comes at a cost. We are not going to be the cheapest in Europe, but the sector is delivering on its promise of being high quality.”

Simply Dynamics’ ERP solution is based on Microsoft Dynamics’ NAV. Food companies also use its Electronic Data Interchange systems. Its voice-based warehouse tracking delivers rapid data transfer, giving instantly traceable digital data without having to key in the information. Very efficient, low cost.

But, if so many Irish food companies are buying into this technology, what is the likely source of the horsemeat scandal?

Mr Foskin explains that quality control is like an inverted food pyramid, monitoring the intake of ingredients at the plant through to the final distributed processed product.

For EU food plants, data from each link in that chain is monitored. The problems are most likely to arrive when “middle men” such as non-EU traders move goods from one EU-approved plant via a third party, or where goods are relabelled.

“There needs to be greater vigilance and control of this area by suppliers and manufacturers,” Mr Foskin said. “With lasagne, for instance, there are four batch processes, with the bolognese sauce, cream sauces, etc. There is a lot of traceability in the chain.”

Food production companies, shops, and restaurants now understand it is essential to perform audits themselves as they want assurance that if they are called upon because of a food safety problem they can stop the problem before their brand is damaged.

Mr Foskin said: “Because of the low-value nature of some retail foods, such as a lasagne or a box of burgers, the traceability is in batches rather than individual units. That is why when there is a need to recall, it is the warehouse which recalls everything off the shelf of every retailer, based on the lot number.

“Ten years ago, when volumes were lower, the manufacturer would have known which store he’d sent which unit to. Now he sends all of his batches to the warehouse. The manufacturer doesn’t know which exact store the product has gone to.”

Simply Dynamics’ ERP system allows backwards and forwards traceability. The manufacturer can trace goods back from the finished lot and supplier number. Keeping the costs of this traceability demands smart, low-cost technology.

Mr Foskin said: “A lot of our warehousing is being done with voice-based systems that are fully integrated back into the ERP system. Manufacturers are constantly under pressure in terms of cost, and this approach delivers savings.”
All products are required to have a specific lot number that would allow for the product to be returned to the supplier in the case of a recall. The Dynamics NAV records lot number of product and packaging, name, address, phone number, fax number, email address, date of receipt, transportation carrier, bill of lading number, and mode of transportation.

It also records all relevant QC test data, shelf life, data on movements, inventory, allergens, tests, incubations, and has a management system for handling complaints. This system is typical of the traceability heights attained by Irish food companies in recent years.

“Very rigid QC and QA systems are needed, which comes back to vendor rating,” Mr Foskin said.

“Vendor rating gives some payback for food manufacturers, who know that there are good and bad suppliers out there.

“This technology gives them firm data to back up their stringent controls. It tracks late deliveries, short deliveries, quality of packaging, etc.

“When you rate a vendor, the payback comes when you negotiate future contracts with a supplier. You have the data on their poor performance.

“The Irish food industry deserves a pat on the back in terms of the quality standards and efficiency it delivers. It is a flagship industry, and understandably so. I have worked all over the world in this area for many years. Irish standards are way ahead of the competition.”

Foreign news reviews and more comprehensive coverage of Irish news is available in our Daily News Digest in the Global category on Finfacts Premium.

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